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PHOENIX - Orion Properties Inc. (NYSE:ONL), currently trading at $2.37 per share with a market capitalization of $134 million, announced Wednesday that its Board of Directors has unanimously rejected an acquisition proposal from Kawa Capital Management that valued the company at $2.50 per share in cash.
The board determined that the June 20 proposal "significantly undervalues the Company and is not in the best interests of Orion’s stockholders," according to a press release statement. The decision followed a review process conducted with independent financial and legal advisors. InvestingPro analysis suggests the company may indeed be undervalued, with the stock trading at just 0.18 times book value and showing a strong free cash flow yield of 13%.
Reginald H. Gilyard, Non-Executive Chairman of the Orion Board and an Independent Director, said the board remains "open to evaluating opportunities to enhance stockholder value" and will consider any proposal that "appropriately values the Company and its prospects."
Orion Properties is an internally-managed real estate investment trust that owns and manages a diversified portfolio of office properties across the United States, primarily leased on a single-tenant net lease basis. The company’s portfolio includes traditional office properties, governmental facilities, medical offices, and flex/laboratory spaces. Despite challenging market conditions reflected in a 19% year-over-year revenue decline, the company maintains a healthy liquidity position with a current ratio of 2.58. InvestingPro subscribers can access 12 additional key insights about Orion’s financial health and valuation metrics in the Pro Research Report.
The company was spun off from Realty Income (NYSE:O) in November 2021 and began trading on the New York Stock Exchange on November 15, 2021. Orion is headquartered in Phoenix, Arizona, with an additional office in New York.
Wells Fargo is serving as financial advisor to Orion, while Hunton Andrews Kurth LLP is acting as legal advisor. For investors seeking deeper analysis of Orion’s valuation and prospects, InvestingPro offers comprehensive financial metrics, Fair Value estimates, and expert insights as part of its coverage of over 1,400 US stocks.
In other recent news, Orion Office REIT Inc reported its first-quarter 2025 earnings, revealing revenue of $38 million, which surpassed the forecast of $36.8 million. However, the company reported a net loss of $0.17 per share, despite an improvement from the previous year’s net loss of $0.47 per share. Orion’s revenue, although exceeding expectations, declined from $47.2 million in Q1 2024, reflecting ongoing challenges in the office real estate sector. In a strategic move, Orion Office REIT received a take-private offer from its largest shareholder, Kawa Capital Management, for $2.50 per share. The board is currently reviewing the proposal, while Citizens JMP maintains a Market Perform rating on Orion stock, citing concerns about the valuation. Additionally, Orion’s management has provided guidance for 2025, projecting Core FFO between $0.61 and $0.70 per diluted share. The company is also focusing on a strategic shift towards Dedicated Use Assets (DUA) to enhance long-term growth prospects. Meanwhile, Orion continues its efforts to monetize non-core assets, having recently closed the sale of three vacant properties for $19.1 million.
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